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Reference.org
Risk aversion
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<p>In <a href="/facts/Economics/HYctA2Dn">economics</a> and <a href="/facts/Finance/fLh1GgN8">finance</a>, risk aversion is the tendency of people to prefer outcomes with low <a href="/facts/Uncertainty/VM9pnGvk">uncertainty</a> to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more certain outcome. </p><p>Risk aversion explains the inclination to agree to a situation with a lower average payoff that is more predictable rather than another situation with a less predictable payoff that is higher on average. For example, a risk-averse investor might choose to put their money into a <a href="/facts/Bank/l7VsKwas">bank</a> account with a low but guaranteed interest rate, rather than into a <a href="/facts/Share_capital/JHuhfhaG">stock</a> that may have high expected returns, but also involves a chance of losing value. </p>